Gap between beef retail and farmgate prices cannot continue

Gap between beef retail and farmgate prices 'cannot continue'

NFU Cymru Livestock Board members have called on the rest of the supply chain to restore confidence and stability to the beef price following the dramatic fall in farmgate price over recent weeks.

Speaking at the NFU Cymru Livestock Board meeting yesterday, Lyndon Edwards, Board Chairman, said, “Short term supply issues are very much damaging the long term confidence that farmers have in the beef sector. It appears that the gap between farm gate price and the retail price is widening. This simply cannot continue. Fifteen months ago, after the horsegate scandal, retailers came to us to ask for our support to help them rebuild their relationship with consumers. It is therefore bitterly disappointing to see this lack of support we are now getting in return from the supply chain.

“We need to address the current issues of demand not matching supply, again we look to British retailers to promote PGI Welsh Beef on supermarket shelves in the coming weeks. It must be in all our interests to increase sales through positive promotional activities rather than see retailers look to increase their margin on each kg of beef sold.

“We need to see retailers work with us to build long term solutions to delivering a sustainable beef price, price volatility benefits no one, in recent weeks some have come forward to put a base in the market but without firm commitment from the whole supply chain to tackle this issue of market volatility my concern is that we will see a haemorrhaging of beef production from Wales.”

Dai Davies, Hybu Cig Cymru / Meat Promotion Wales (HCC) Board Chairman also attended the meeting to discuss current HCC activities. Mr Davies referred to a review, recently started by HCC, of the future of the beef industry in Wales. The HCC Board of Directors called for the review after members expressed concern about the recent drop in prices. Gwyn Howells clarified that the review will look at all options to ensure that the Welsh beef herd has a viable and sustainable long term future.

NFU Cymru Livestock Board members highlighted the important role that the next Rural Development Plan can play to support investment in equipment, facilities and technologies on livestock farms across Wales. Mr Edwards said, “It is crucial that the new Wales RDP, currently being drafted by Welsh Government for submission to the European Commission has a budget for investment measures that is sufficient to provide the investment needed on farm to help secure the production base going forward.”

In Scotland, beef farmers looking for clear signals on future trade requirements. The significant drop in beef prices has NFU Scotland to write to Scotland’s abattoirs, asking for improved signalling on likely market needs in a bid to minimise price volatility in the future.

In a letter to the Scottish Association of Meat Wholesalers, the Union has requested that the Association work with beef producers by bringing forward clear messages on the desired carcase specifications needed and likely market requirements going forward.

A more strategic approach to the beef sector will be highly valuable as new CAP support arrangements from 2015 onwards are likely to place more pressure on those rearing and finishing beef cattle.

By working with farmers, NFU Scotland believes the Scottish meat trade would send out a valuable confidence boost at a crucial time for the sector.

NFU Scotland President Nigel Miller said: “While producers can live with an element of volatility, we need to work hard to make sure that there is no repeat of the dramatic downward swing in the beef price being endured just now. Based on retailer requirements, clear messages on the number and specification of carcases needed by processors at an early stage can help deliver greater stability to all parties.

“We fully accept that any guidance from the meat trade would be subject to change in difficult market conditions but I believe clearer signals will be of value to producers in managing both feeding and marketing strategies on farm as we look forward to 2015 and beyond.

“We have asked QMS to look at how Scotland’s cattle kill profile has changed and whether that is contributing to price pressure. The national focus on spring calving and perhaps an increasing number of young bulls being produced by suckler herds may be factors that are exerting a level of pressure on the traditional pattern of prime cattle supplies at this time.

“If these core herd management factors are contributing to the current situation, then farmers can recognise it and look at ways of smoothing that peak of production.

“Producers are also acutely aware of the impact of the reduced Scottish herd and the challenges of maintaining the throughput of Scottish cattle at Scottish plants at certain periods of the year. Clearly English and some Irish cattle fill that gap in supply.

“In the present market conditions, with prices still moving down, the Scottish premium over Irish prime stock is closing and finished stock are reported to be standing on some Scottish farms.

“That means both breeders and key finishers are making tough decisions. The CAP support system post 2015 will be challenging for many beef producers and the market is now key to the future and will drive decision making.

“A continued strong commitment from Scottish processors to Scottish production and a positive operating environment is important to stabilise the market and bolster confidence.”